Mr. Wall Street Goes to Washington ; President Bush Named Goldman Sachs CEO Henry Paulson Jr. Tuesday as His Pick for the Next Treasury Chief

Article excerpt

President Bush has lined up a Wall Street heavyweight as chief
spokesman for the economy. He's Henry Paulson Jr., who has been
running finance powerhouse Goldman Sachs - and as the designated
next Treasury secretary, he'll have a big job ahead of him.

Despite the current strong economic statistics, he must try to
lift public sentiment that polls show is distinctly negative about
the economy. At the same time, he will have to convince the world's
investors that they should continue to finance the swollen US budget
and trade deficit. And Wall Street analysts say his extensive
dealings with Chinese leaders make him one of the most qualified to
persuade China to loosen control of its currency - a hot topic in
Washington.

"His job between now and the election is to get out and tell
everybody, I'm captain of the universe and I'm telling you
everything's OK. Just trust me," says Stanley Collender, a
Washington budget expert and a managing director at Qorvis
Communications.

One of the toughest challenges of Mr. Bush's second term has been
to eliminate the public's perception gap on the economy - the
seeming disconnect between strong economic numbers and low public
opinion of the state of the economy. Recent polling by Gallup shows
that investor optimism remains at its lowest point since last
November, and consumers' optimism about their credit situation
remains low.

"This is all tied to gas prices," says Dennis Jacobe, chief
economist at the Gallup Organization, based in Princeton, N.J.

Overall, the public remains pessimistic about the economy. In mid-
May, 29 percent of the public rated the economy at excellent or
good, down from 38 percent in mid-April, according to Gallup. Among
those who viewed the economy positively, 47 percent cited job
availability as the top reason. Among those who viewed it
negatively, the price of fuel was the top reason at 26 percent,
followed by unemployment (21 percent) and inflation (14 percent).

"What the overall economic numbers show is that there's a
particularly upper- and middle-income group that continues to do
very well, and the economy reflects how that better-to-do group is
faring," says Mr. Jacobe. "What is happening in terms of middle- and
lower-income groups isn't reflected in average economic data as much
as it is in polling data."

One way Mr. Paulson can help to change the perception of the
economy is to work through Wall Street. A confident Wall Street
could help boost confidence on Main Street. Analysts compare him to
Robert Rubin, Treasury chief under President Clinton, and also a
former chairman of Goldman Sachs. Mr. Rubin often stressed that it
was in America's interest to have a strong dollar. …